The Federal Energy Regulatory Commission has given Questar Corp. a one-year extension to get the West Zone of its Southern Trails Pipeline up and running and supplying natural gas in California.

Southern Trails placed the 490-mile East Zone of the 700-mile, 16-inch diameter pipeline system, a converted crude oil line, into service in late June, and the Commission had directed Southern Trails to do the same for the remaining West Zone leg by July 28, 2003. But Questar officials concede the task won’t be easy, given the regulatory and market obstacles they face in California.

“It’s physically possible to do [put the West Zone in service], but whether or not there’s a market for that service still remains to be seen,” said Questar spokesman Chad Jones. “We have to build a market first” for that segment of Southern Trails, he noted.

As envisioned, the West Zone would run through the “heart of industrial and commercial areas” in Southern California in direct competition with Southern California Gas, which has had a lock on the gas market in the region for years. But “California is not interested in opening its lines to outside companies,” such as Southern Trails, a Questar spokesman said last month (see Daily GPI, June 25).

While Questar’s Southern Trails plans to seek out customers interested in service on the West Zone, the company said it has been forced to consider possible alternative uses for this segment of the pipeline, including sale or possible conversion to other uses.

The East Zone, which originates at the Blanco Hub in New Mexico, currently is shipping up to 80,000 Dth/d of natural gas supplies from the Rocky Mountains and New Mexico’s San Juan Basin to multiple delivery points at the California border.

Questar purchased the crude oil pipeline from Arco in late 1998 for $38 million. The cost of the conversion to natural gas was estimated at $100 million.

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